“The EU has confirmed that the legal framework providing for the lifting of its nuclear-related economic and financial sanctions is effective. The United States today is ceasing the application of its nuclear-related statutory sanctions on Iran,” said EU foreign policy chief Federica Mogherini, reading the joint statement.

Governments across the six-nation Gulf Cooperation Council are taking unprecedented measures to counter the slump in oil prices, curtailing some of the world’s most generous welfare systems to plug widening budget deficits. In some countries, contractors are facing delays in government payments, while companies are reducing their workforces to trim costs.

Every major stock index in the Middle East, with the exception of Tehran’s, plunged on Sunday as the prospect of Iran adding to an oil supply glut pummeled markets already reeling from falling crude prices and a global sell-off in equities. With oil priced below $30 a barrel, governments may have to eat further into benefits that citizens have enjoyed for decades -- at a time of growing regional turmoil and a proxy confrontation with Iran from Syria to Yemen.

The Saudi Arabian central bank’s net foreign assets fell by $96 billion in the first 11 months of 2015 to $628 billion, and the government sold bonds for the first time since 2007 to finance a budget deficit of about 15 percent of economic output.

“The political contract between the rulers and the citizens is based on a provision of wealth to the citizens, so any adjustment of the subsidies or of the other services will have some political risk,” said Toby Matthiesen, senior research fellow at the University of Oxford and author of “The Other Saudis: Shiism, Dissent and Sectarianism.”

The oil industry is braced for an increase in Iranian production after western powers lifted many of the sanctions linked to its nuclear programme, paving the way for Tehran’s full return to the international market.

The re-emergence of Iran, which claims it can swiftly boost production and exports by 500,000 barrels a day, threatens to add to the glut of oil that has pushed prices to a 12-year low of less than $30 a barrel. It comes as relations between Iran and Saudi Arabia, Opec’s largest producer and de facto leader, have soured.

UN inspectors said on Saturday that Iran had dismantled significant elements of its nuclear programme, paving the way for the country to increase exports of its crude to global markets after nearly four years under economic and financial sanctions.

Hassan Rouhani, Iran’s president, on Sunday announced “we have started selling more oil as of today”. But a senior oil official told the Financial Times that there had been no rise in sales yet. “When we say we sell more crude, we mean we already have the capacity to increase exports by 500,000 bpd almost immediately,” he said. “Now, we have customers to buy about 300,000 more barrels per day and will do it as soon as financial restrictions are removed which may take one more week.”

More than 100m barrels of crude oil and heavy fuels are being held on ships at sea, as a year-long supply glut fills up available storage on land and contributes to port congestion in key hubs.

From China to the Gulf of Mexico, the growing flotilla of stationary supertankers is evidence that the oil price crash may still have further to run, as the world’s energy infrastructure starts to creak under the weight of near-record inventory levels.

Sky-high supertanker rates have prevented them from putting more oil into so-called floating storage, shutting off one of the safety valves that could prevent oil prices from falling further.

JBC Energy, a consultancy, said in many regions onshore oil storage is approaching capacity, arguing oil prices may have to fall to allow more to be stored profitably at sea.

“Onshore storage is not quite full but it is at historically high levels globally,” said David Wech, managing director of JBC Energy.

“As we move closer to capacity that is creating more infrastructure hiccups and delays in the oil market, leading to more oil being backed out on to the water.”

Traders looking to make money by storing oil at sea faces a number of challenges. The average daily hire rate for a very large crude carrier has been close to $60,000 a day this year and briefly hit $108,000 last month as producing have scrambled to find customers further afield because of a supply glut estimated at up 2m barrels a day.

Traders estimate it may need to reach $6 to make sea storage viable.

Flotilla Trade

If it takes a $6 spread to make a profit in six months, the flotilla buyers barely have it.

September Crude is sitting right about $35 bucks.

Arbitrage profit is declining across the board. And what happens if the tankers cannot unload oil in six months because onshore storage is filled up?

Supertankers Sitting

Supertankers sitting may have fueled the totally inaccurate report that not a single transport ship in the North Atlantic is moving.

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